Commitment for Universal Family Daycare Availability
A new childcare system, proposed by NEF, Pregnant Then Screwed, the Joseph Rowntree Foundation, aims to revolutionise the current system in England. The proposed system seeks to provide free, high-quality childcare to all families, with costs covered through progressive taxation.
The proposed system is designed to address the current complexities and inconsistencies in the childcare system, which many parents find difficult to navigate. The system, if implemented, would cost approximately £7 billion per year.
One of the key features of the proposed system is a universal core provision of 15 hours a week, free for all children from nine months to four years old, regardless of parental working status. This is set to expand in September 2025, with children in families where all parents work at least 16 hours per week having access to 30 hours of funded childcare from nine months to four years old.
Low-income families, particularly those in full-time work, would benefit significantly from the proposed system. Currently, a family earning £34k spends over 11% of their gross earnings on full-time childcare for one child. Under the proposed system, these families would be better off, with 66% being no worse off and almost 60% of families with pre-school children expected to be better off.
The proposed system also includes a cap on childcare costs as a percentage of family earnings for hours purchased above the core provision. This cap would make the system inherently progressive, benefiting families in the bottom 60% of the earnings distribution by an average of £1,081-£1,259 a year.
The education secretary has expressed support for the proposed system, which aims to meet the demand for a simplification of the current childcare system. However, the system would require additional investment to address the question of what level of payments to providers are required for high-quality provision and to respond to rising costs providers have faced in recent years.
The proposed system would also help increase the supply and quality of childcare provision, particularly in lower-income areas. This could have potential wider behavioural benefits, such as increased labour market participation.
The education secretary plans to pursue more comprehensive childcare reform, setting out plans later this year around an early years strategy. Transitioning to the proposed system would require addressing challenges and additional investment, but the model offers flexibility to fit different funding envelopes and meet different policy objectives.
The current childcare system lacks coherence and is not easy to navigate for parents. The proposed system, with its simplified and more progressive structure, aims to help families afford more hours of childcare, making childcare costs easier to understand for families. Families on universal credit and in work will be supported to meet the cost of childcare.
Realizing the full benefits of the proposed system would require additional investment, but costs would decrease in response to positive labour market outcomes and higher tax revenues. The proposed system, if implemented, could present a net additional cost to the government of £3 - 3.4bn compared to the fully expanded funded hours system, depending on usage levels. However, the potential benefits to families and the wider economy make it a compelling proposition for reform.
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